Xaxis Axes DSP, Calls Trading Platforms 'Commoditized'

WPP Group's trading desk Xaxis is known for its proprietary approach to technology. The GroupM unit has incubated numerous ad platforms, a legacy of WPP's 2007 acquisition of 24/7 Media. It offers these products to clients as an alternative to licensing from vendors. By contrast, trading desk rivals VivaKi AOD (Publicis), Cadreon (IPG), and Accuen (Omnicom) are more inclined to rely on third parties.

But not all of Xaxis' ad tech creations are meant to last. The trading desk broadened its use of ad servers years ago, beyond 24/7 Real Media's Open AdStream (its in-house option), as that space became commoditized. Now, AdExchanger has learned, its DSP has been put out to pasture as Xaxis shifts client campaigns to outside DSPs.

"We decided two years ago that a DSP that allows us to hook into exchanges was a proprietary stack. And therefore we had our own," says Xaxis Global COO Mark Grether. "As technology evolved, we came to the conclusion that the DSP is becoming a commodity, but there are other technologies that make a difference. We've shifted our focus into other areas."

Grether says the top development priority is now around data management. Xaxis operates two DMPs, both "proprietary." One is for analytics, including user-level attribution. The other is a real-time audience targeting and ad decision engine. Bidding actions are handed off to the trading partner. Xaxis CEO Brian Lesser points out WPP has invested more than $1 billion to date in technology to date..

So who are Xaxis' DSP partners? Grether said there are many – including The Trade Desk – but declined to list them.

"Yes, we do work with multiple DSPs, but the unifying thing is always the layer on top of it," Grether said. "It's crucial for us that we have the universal layer that synchronizes the pipes we use to access media."

Additionally, Grether says Xaxis snaps up more inventory directly from publishers than through exchange buying, and those buys use programmatic pipes based on Xaxis' own technology.

Grether's claim that DSPs have been commoditized represents a significant about-face from its position one year ago. Last fall, when Facebook launched its ad exchange, Xaxis was the only trading desk with a direct "seat" among the seven or so DSPs anointed to access that inventory. Direct access to FBX became part of Xaxis' marketing outreach and seemed to differentiate it from other trading desks -- especially VivaKi AOD, which was briefly locked out of FBX when it became clear that its preferred DSP, Google's Invite Media (now DoubleClick Bid Manager), would not be allowed to bid there. Cadreon, Accuen, and other agencies accessed FBX through Turn, MediaMath, and other preferred DSP relationships.

Today, the number of FBX marketing partners has ballooned to 17, and Xaxis is no longer one of them. Executives say Xaxis buys loads of FBX inventory, but through other DSPs rather than its own.

"At that time we were one of the few," says Grether, referring to the FBX beta period. "And therefore it was a strategic advantage. But now as there are 17 pipes, having one of the pipes is not a competitive advantage."

The move by Xaxis to embrace multiple DSPs is not unlike VivaKi AOD's recent diversification of its trading platforms. After several years of nearly-exclusive trading on DoubleClick Bid Manager, AOD has lately added more partners, including MediaMath and Turn for display advertising, GraphEffect and Voxsup for social, and Adelphic for mobile. In fact, it now serves more ads through Turn than through Google's DBM.

The difference between the two is that AOD was motivated, not by DSP commodification, but seemingly by the opposite -- differentiation. Go figure.

The changes at AOD and Xaxis may point to growing consensus that the proper role for agencies is systems integrator, Pivotal Research analyst Brian Wieser suggested.

"The role of the trading desk may be evolving such that uniformly it is about integrating technology and pairing it with humans who socialize ideas," he said. "That's ultimately what agencies do."

Xaxis is by most accounts the largest member of the trading desk family. Its 300 employees typically manage more than 1,000 brand campaigns concurrently. It has recently rolled out new integrations with radio and out-of-home inventory, and continues to iterate around methods to buy premium inventory programmatically.

Correction: An earlier version said Xaxis "said goodbye" to its in-house ad server. In fact, it merely diversified. 24/7 Real Media's Open AdStream (the in-house option at WPP) is still among the technologies it uses.

4 Comments

The list of FBX- qualified companies is here on their PMD Center: http://www.facebook-pmdcenter.com/fbx - while many of us were announced as beta partners, this list is the definitive one of those that have actually qualified and remain qualified per Facebook's requirements. As the article correctly points out there are 17 FBX-qualified companies, of which 3 are also PMDs.

We are learning that most trade desks these days are using multiple DSPs, for different reasons including multi-bid strategies and exclusive inventory access. The multi-platform approach is good, as each platform has it's strengths and weaknesses. It takes much more work on the operations, but no pain no gain.

The unifying layer they speak of, which is not technical or automated remember, is the value a trade desk is employed upon.

To echo my comment against an earlier story this week about VivaKi embracing multi-platform, it’s gratifying to see yet another major agency trade desk adopt an approach we have been championing since 2007.

Everyone already acknowledges that multiple ad tactics are key to achieving advertisers’ goals but these two moves show an increasing acceptance that each platform has strengths and weaknesses vis a vis particular tactics.

It’s one thing to accept this and another to act on it: the languages used by different platforms makes intra-platform data hard to reconcile and uploading bids takes more time. That’s why most agencies have shied away from the approach, or have claimed multi-platform when in reality campaigns are run on one of a few platforms available.

Xaxis in particular seems to have joined us in understanding the importance of having a unifying “layer” across platforms to resolve these efficiency issues and through it realise the promise of multi-platform.

I invite others to join the fray but warn them that in terms of platform relationships and quantities of data feeding insights about platform strengths and weaknesses, we’ve been at it for years!

@James Curran, it sounds like we’d both agree that the value of a trade desk lies in its peoples’ expertise and that a multi-platform approach is a positive progression. You correctly identify that there are costs in terms of efficiencies for a conventional trading desk pursuing a multi-platform approach, which impact on its ability to add value because people get distracted by run of the mill activity. That’s why for so many trading desks ‘multi-platform’ in reality means ‘a few platforms are available to us, but each campaign is really run over one platform’. But what if there was an infrastructure collating multiple platforms’ individual data sets, translating them into a common language and providing more intelligence on platform performance to get the best out of each? It’s been working for us and our clients.